E9-15480. Buy American Exception Under the American Recovery and Reinvestment Act of 2009

AGENCY:

Office of the Assistant Secretary for Public and Indian Housing, HUD.

ACTION:

Notice.

SUMMARY:

In accordance with the American Recovery and Reinvestment Act of 2009 (Recovery Act), and implementing guidance of the Office of Management and Budget (OMB), this notice advises that an exception to the Buy American requirements of the Recovery Act was determined applicable to the Boston Housing Authority's construction of a project using Recovery Act funds.

FOR FURTHER INFORMATION CONTACT:

Dominique G. Blom, Deputy Assistant Secretary for Public Housing Investments, Office of Public Housing Investments, Office of Public and Indian Housing, Department of Housing and Urban Development, 451 7th Street, SW., Room 4210, Washington, DC 20410-4000, telephone [phone] (this is not a toll-free number). Persons with hearing- or speech-impairments may access this number through TTY by calling the toll-free Federal Information Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

Section 1605(a) of the Recovery Act imposes a “Buy American” requirement on Recovery Act funds used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States. Section 1605(b) provides that the Buy American requirement shall not apply in any case or category in which the head of Federal department or agency finds that: (1) Applying the Buy American requirement would be inconsistent with the public interest; (2) iron, steel, and the relevant manufactured goods are not produced in the U.S. in sufficient and reasonably available quantities or of satisfactory quality, or (3) inclusion of iron, steel, and manufactured goods will increase the cost of the overall project by more than 25 percent. Section 1605(c) provides that if the head of a Federal department or agency makes a determination pursuant to section 1605(b), the head of the department or agency shall publish a detailed written justification in the Federal Register.

In accordance with section 1605(c) of the Recovery Act and OMB's implementing guidance published on April 23, 2009 (74 FR 18449), this notice advises the public that, on June 11, 2009, HUD granted the Boston Housing Authority, upon its request, an exception to applicability of the Buy American requirements with respect to work, using Recovery Act funds, in connection with the construction of units for Phase 1B of the Washington Beech HOPE VI project. Although a final determination of applicability of the Buy American requirements to housing had not been made at the time that HUD granted the exception, given the compelling exigencies presented by BHA in its waiver request (as described in this notice), HUD considered the waiver request on the assumption of the applicability of the Buy American requirements to the Phase 1B project. The exception was granted by HUD on the basis that applicability of the Recovery Act Buy American requirements would be inconsistent with the public interest.

BHA received Recovery Act funds in the amount of $10 million for construction of Phase 1B units of the Washington Beech HOPE VI project. An award of the HOPE VI funds to BHA predated BHA's award of the Recovery Act funds. BHA notified HUD that it had procured Trinity Financial as its development partner in 2007 for the HOPE VI grant awarded for the construction of the Phase 1B units. Because the award of the HOPE VI grant to BHA was made prior to passage of the Recovery Act's requirements, the requirements of section 1605(a) were not included in BHA's procurement process. Trinity Financial secured and selected a general contractor, CWC Builders, Inc., to build the units in Phase 1B. This construction contract between Trinity Financial and CWC was also negotiated prior to the passage of the Recovery Act, and accordingly section 1605 requirements were not included in the contract. The contract requires CWC Builders to obtain all structural steel as soon as possible to meet the construction deadlines for the Phase 1B project.

In addition to these contracts entered into prior to the Recovery Act, Washington Beech Phase 1B will be developed by a limited partnership that includes a tax credit investor, RBC Tax Credit Equity, LLC (RBC). Prior to passage of the Recovery Act, Trinity Financial received a commitment from RBC to provide equity through the Low-Income Housing Tax Credit (LIHTC) program. RBC informed Trinity Financial and BHA that if the funding transaction for Phase 1B did not close and documents were not recorded by June 15, 2009, RBC would withdraw its offer to purchase the Phase 1B credits. Such withdrawal would place Trinity Financial in the situation of having to renegotiate the tax credit contribution or find another equity investor. BHA advised that delay at this juncture would imperil the availability of the tax credits and jeopardize the ability to complete construction of the Phase 1B units by the deadline of July 28, 2010. BHA also advised that, in accordance with the contracts entered into prior to enactment of the Recovery Act, CWC Builders are ready to begin construction immediately upon the closing that was scheduled to take place on June 15, 2009. BHA advised that if there is a delay in the start of construction, jobs planned by the construction would be lost.

HUD determined that application of the Buy American requirements to the Phase 1B units, given the actions and contracts that occurred prior to enactment of the Recovery Act would be inconsistent with the public interest. The exception granted is for Phase 1B units only. It is not applicable to future construction phases at the Washington Beech HOPE VI project.

Dated: June 23, 2009.

Dominique G. Blom,

Deputy Assistant Secretary for Public Housing Investments.